Negotiating D&O at Every Stage of the Build

My first insurtech client was convinced he was going to be the Steve Jobs of insurance.

Ten years ago he had everything investors wanted. A growth curve doubling every quarter. A proprietary pricing algorithm. And a claims and reserving operation so unglamorous it never made the deck.

Guess which one kept him solvent.

The growth curve drove the keynote. His algorithm set the valuation. The reserve discipline no one put in the deck is the only reason he was still standing three years later. He figured out early which numbers were proof and which were liabilities waiting to mature.

That is exactly how financial lines underwriters read an insurtech’s metrics deck today. Hockey-stick GWP often means you bought the book through underpricing and the losses are delayed. Proprietary models that have never been tested through a hard market get priced like unknowns. Reserve adequacy is a board-level D&O exposure, not an actuarial footnote. Cap table pressure to sustain growth becomes Exhibit A in litigation. And the shift from “tech company” to “insurance company” is where management liability concentrates.

The founder understood all five before the underwriter opened the deck. That answer set his terms.

Last week at Insurtech Trails, in a room with twenty founders and the VCs backing them, the conversation kept landing on the same thing. The D&O conversation changes every time your company does, and most founders negotiate with last year’s story.

Here is what the underwriter actually prices at each stage, and what to bring before they ask.

Your numbers are your D&O submission.

The underwriter grades your financial controls before your loss ratio.

A founder running QuickBooks with a part-time bookkeeper gets one conversation. A company with audited financials and a CFO who can walk through reserve development earns a different set of terms. The gap comes down to whether the underwriter can see that someone competent is watching the money.

At seed, bring clean financials and a roadmap for your finance function.

At Series A, bring audited financials and a CFO who can take the underwriter’s call. At growth, bring the audit committee minutes and the reserve methodology. Every upgrade in your finance function is a D&O negotiation move, and most founders treat it as overhead. At the earliest stages, some risks will face limited capacity no matter what you bring. But the founders who show their work get to the table. The ones who don’t get passed.

We have seen underwriters move a fast-growing insurtech MGA from clean terms to a watch list purely on adverse reserve development, before a single claim was filed. The same premium bought half the limits after a material weakness finding from the auditor.

The underwriting memo never mentioned the technology. It asked whether anyone credible was watching the money.

You stopped selling solo. Your wording didn’t notice.

When the founder made every call, the professional judgment sat with one person the underwriter could evaluate. That person is still who your E&O was written for.

Now a team sells, models triage, and agentic workflows intake, price, and quote before anyone opens the file. The underwriter sees that shift and wants to know where the model decides alone and who answers when it is wrong. Build a one-page decision map before your next submission: where a human decides, where the model assists, where it runs alone, and who owns each call by name.

The map is often what separates two companies with identical models leaving the same meeting with different terms.

A Chubb unit recently paid a $500,000 cyber claim and then sued the tech vendors its insured hired for protection, alleging they failed to deliver what their contracts required. Both defendants are technology companies. Your vendor contracts are part of this negotiation now whether you bring them or not.

Your board is a rating factor.

A three-person advisory board at seed gets one D&O conversation.

A governance board with audit and risk committees at Series B earns materially better terms. The underwriter prices documented oversight, not meeting attendance. Can the board explain where AI models act without human review?

Can management hand an examiner the governance records today?

Over twenty states can now look through a carrier to the vendor whose model made a regulated call. The governance you build for your renewal is what answers an examiner later. A board that defers to management on everything pays for the ambiguity. And as governance obligations grow, so does the personal exposure of each director. Side A coverage protects individual directors when the company cannot or will not indemnify.

What that protection needs to look like changes at every stage of the build.

Recent cases against one of the largest health insurers show how this plays out. Plaintiffs and regulators both asked the same question: who approved the claims algorithm, who set the guardrails, and where is that decision written down?

The VC on your cap table has their own view of your D&O.

A pre-seed company with three angel investors has minimal securities exposure. A Series B with institutional VCs, board seats, registration rights, and a secondary on the horizon has a different D&O need entirely.

The VC who just wired has their own view of your D&O. It is rarely the same as yours. Have that conversation before the term sheet closes, not after. Founders who bring the tower conversation into the fundraise get better terms on both sides. Building it after the raise means the underwriter already knows your exposure grew and you have not addressed it.

We have already seen insurtechs that went public at tech valuations face securities suits when the market realized they were carrying insurance risk. The complaints read like underwriting memos: growth projections, loss ratios, reserves, and the distance between “we are a platform” and “we are a carrier.”

The cap table, the rights stack, and the governance around disclosures were all part of the record.

Your company sits at one of these four stages right now, and the D&O conversation at the next one is different from the one you just had. The founder in that story figured it out ten years ago. The numbers that set your terms are the ones that survive a full cycle. Everything else is early.

We negotiate these programs at every stage of the build. If yours hasn’t been re-read since the last one, let’s fix that before your next renewal. Book a 1:1 call here

In Case You Missed It!

We mapped the macro before we went to the floor. Where the capital is concentrating, how agentic AI is reshaping the submission, and what happens when nobody governs the inputs. Read it here​

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Stay Covered Out There Y’all,
​FLIP
​Founder and Managing Partner
LION Specialty